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Recyclers News Press
Slow sales seem to become a cash flow crisis rather
quickly these days. After weathering the great reces-
sion, auto salvage businesses are still waiting for the
sales volume to return to “normal” or at least predict-
able levels. New car sales are said to back on track,
which should in turn create an inventory of trade-ins
which should stimulate used car sales and thus force
buyers to either scrap out project cars or seek used
parts for repairs. But waiting for the trickledown effect
can bring about a cash flow crisis. When researching
solutions to the sales slump problem, the common
denominator seems to be (of course)
reduce cost and
increase sales
, high school economics class all over
again. But maybe a bit more innovation is required in
the new millennium.
Reconnecting with existing customers
in a mean-
ingful way also emerged as a central tactic. In our in-
dustry we may have become accustom to reduced
sales from reliable clients as their business was also
slow. Since our products are “downstream” it may be
time to re-engage and make a sales call or set lunch
meeting with a longtime customer who hopefully is
seeing an uptick in repair work.
Address pricing issues
in two ways, first run sales
or promotions and second raise your prices. My re-
search showed that despite the constant complaints
about the price of normal goods such as milk, bread,
clothes and gasoline many small business owners
have not significantly reviewed their own pricing struc-
tures even when their suppliers have increased the
cost of goods.
Leverage assets
to keep your business ready to do
business. This tactic came down to two schools of
thought, either sell some assets to create cash flow or
leverage assets through borrowing if the slump seems
short term. Most likely our auto salvage facilities have
already done this or “sold off their scrap metal to
make payroll” a quote I only wish I could attribute to
just one speaker! Below are excerpts from the three
best sources I used to compile this information. The
citation are also given in case you are intrigued
enough to seek more advice from these experts.
Ways to Increase Cash Flow
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Ebbs and flows in sales should be expected in any
industry sector. Most business owners can account
for cyclical nature of sales including the high volume
sales we enjoy following a snow storm or widespread
hail damage and the slow sales seen in recent
months from the recovered new car sales. “But, in
some cases, a decrease in sales can hit a company
unprepared, which can have a big impact on its cash
flow.”
1
Author Dave Donovan wrote an article for Dun &
Bradstreet recently that has some broad but applica-
ble advice for ways to increase cash flow.
“Here are five ways you can quickly increase cash
flow when you need it most.”
1
#1 – Hold a Sale or a Special Promotion
1
Sales and special promotions are a one way to in-
crease your cash flow quickly. This not only increases
your sales volume, but it can also introduce your com-
pany to a wider audience. These limited-time offers
do not have to break the bank in advertising cost with
the use of social media and electronic communica-
tions. Announce the sale on your social media and
send out emails to existing customers. Promote it
early and often so your customers pay attention to the
sale’s deadline. You want to drive home the urgency
of the deal.
#2 – Use Business Debt Smartly
1
While so many consider accruing business debt a bad
thing, it can actually help cash flow needs. “If you are
sure that your sales slump is temporary, or you are
experiencing an expected seasonal slump, then tak-
ing out a small-business loan or falling back on your
business credit cards can help offset your sluggish
cash flow until sales pick back up again. The key is to
resolve the debt you accrue once the sales pick up.
As long as you do that, your business credit and its
debt should be just fine.”
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Cash Flow Crisis or Sales Slump
Solutions to Solve the Problem
